On February 17, 2021, a property owned by a homeowner was set on fire. The homeowner submitted a claim to their insurer, Suncorp. Unfortunately, Suncorp denied the claim, citing a clause in the policy's Product Disclosure Statement (PDS) that specifically excluded coverage for malicious acts and vandalism committed by a resident of the insured address with the policyholder's consent.
In this case, the homeowner's son - who was living in the property at the time - had caused the fire and subsequently pleaded guilty.
The exclusion the insurer cited is a common one in insurance policies. Policies contain various exclusions that limit coverage, and it's important for policyholders to review these carefully and understand what is and isn't covered.
In this case, the exclusion applied to the son's deliberate act that demonstrated "a reckless disregard for the consequences." The fact that the homeowner didn't consent to the fire was irrelevant because the son was living at the property with the homeowner's consent.
The homeowner argued that the exclusion shouldn't apply because they didn't consent to their son lighting the fire. However, Australian Financial Complaints Authority (AFCA) disagreed, stating that the exclusion applied to anyone living at the property with the insured's consent. The panel said that it was satisfied that the son had caused the fire and that the exclusion applied.
Notably, while the court refused to record the son's guilty plea due to concerns about his mental health, AFCA said that there was not enough information about his state of mind to overrule the insurer's decision. AFCA added that the complainant could ask Suncorp to reassess its liability once a psychiatric report was provided and the court outcome had been determined.
Following the claim's denial, Suncorp offered the homeowner an ex-gratia payment of $261,318, which the homeowner deemed insufficient for repair costs. The homeowner sought an additional $166,159 or $261,328, based on quotes provided.
However, AFCA noted that Suncorp's offer had been based on an itemised repair quote from an assessment by the insurer's builder, which the panel deemed fair.
Insurance policies can be complex and challenging to navigate, especially when dealing with policy exclusions. In this case, the homeowner's insurance policy didn't cover damages caused by their son, even though the homeowner didn't consent to the fire. Understanding the specifics of your policy - including the exclusions - is critical in knowing precisely what you are and aren't covered for.
Published:Thursday, 25th May 2023
|'Confusing Question': Insured Successfully Challenges Home Insurance Claim Denial|
29 Sep 2023: .financialservicesonline.com.au
In a recent dispute ruling, a homeowner has successfully contested her insurer's decision to deny a storm damage claim, highlighting an issue with questions regarding the property's condition at the time of purchase. The complainant's victory was based on the finding that she had answered the questions honestly and in good faith, based on her genuine belief about the condition of the property. - read more
|Crop Insurance Claim Denied Due to Fungal Disease|
28 Sep 2023: .financialservicesonline.com.au
A recent claims dispute regarding a farmer's faba bean crops has garnered attention, as the insurer has denied the claim based on the presence of a fungal disease. The farmer argued that a hailstorm was the cause of the disease outbreak, but the decision went against him. Let's delve into the details of this case and understand the ruling. - read more
|Health Insurance Premiums Set to Rise: What You Need to Know|
28 Sep 2023: .financialservicesonline.com.au
Next week, almost five million Australians will see a substantial increase in their private health insurance premiums as major insurers begin to pass on delayed price hikes from October 1st. - read more
|Landlord loses dispute over drug farm fire|
27 Sep 2023: .financialservicesonline.com.au
A recent dispute ruling has resulted in a landlord losing her claim after a fire caused by a tenant's illegal drug operations. Despite the severe damage to the property, the landlord's insurer has relied on a policy exclusion to deny the claim. - read more
|Prepare for Unpredictable Weather as El Nino Looms, Insurers Warn|
25 Sep 2023: .financialservicesonline.com.au
Insurers in Australia are urging citizens to be proactive in preparing for unexpected and extreme weather conditions. With the Bureau of Meteorology declaring an El Nino event this week and issuing severe weather warnings for several regions in the country's southeast, Australians are being reminded not to be complacent. - read more
|Income protection insurance|
It's trite but true to say that, for most people, their most valuable asset is their ability to earn an income. But how relevant is income insurance to most Australians? - read more
|DIY Review Checklist for your Income Protection Insurance|
If you have an income protection insurance plan already - or are thinking about buying one, then you need to be aware that these policies require regular maintenance and careful scrutiny to ensure that they adequately meet your needs. Unfortunately, many people purchase income protection insurance policies only to find out about their shortcomings at claim time. - read more
|How Much Life Insurance Do I Need?|
There are many different reasons to purchase life insurance (generation skipping tax, estate plan, estate preservation, surviving spouse needs, planning for your children's future and more). There is no right amount of life insurance, but here are some guidelines that might help you decide how much life insurance you need. - read more
|The importance of Income Protection Insurance for Employees|
While some people might think that income protection insurance is only for self-employed individuals, this is not accurate. This type of insurance is just as beneficial for employees, because accidents and illnesses can happen to anyone at any time. Workers' compensation provides only limited coverage, and most employees don't have much more than a few weeks' sick leave accrued. Of course, if you have more than one job, the situation becomes more of a concern if you are injured at one workplace resulting in being unable to work at either. - read more
|Life Insurance: How much is enough? |
When considering life insurance, you're planning and preparing for an event that most of us would rather not think about. But life insurance represents a critical step in managing your personal finances and ensuring your family's well-being. - read more